Mumbai: The Bombay Stock Exchange (BSE) on Friday launched an SME index that aims at tracking the current primary market conditions in the Indian capital market and measure the growth in investors' wealth over a period.

The index will be constituted by SMEs listed on the BSE SME platform. So far, there are 11 companies listed on the SME platform and this index will have features similar to the BSE IPO index.

"This index will help to track and measure the growth of the companies over a period. Through this, the authorities can recognise the viability of the company.

"And based on the report, people can invest in these companies, which will not only help the organisations to grow their businesses but also create employment," Minister of State (Independent Charge) Ministry of Micro Small and Medium Enterprises K H Muniyappa said here at the launch of the index.

Typically, SME companies in the country have had to rely on debt financing from banks or non-banking financial institutions as equity capital was largely inaccessible to them.

"This time, the government, Sebi and the stock exchanges have put in a lot of efforts to make the third attempt a success. But with the SME platform, companies will not have to rely on loans from banks, but can raise funds through the market and play an important role in contributing to the economic growth of the country," he said.

Out of the 11 companies listed so far, 10 are trading above their issue prices, while one is below its IPO price.

Small and Medium Enterprises (SMEs) in India constitute an important segment of Indian economy. Currently, the contribution of SMEs alone has been greater than 7 percent to GDP and 45 percent to industrial production. It is also the second largest provider of employment after agriculture.

SMEs also contribute to 40 percent of total exports directly and a significant amount of exports indirectly through large trading houses or third parties.